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Tuesday, June 30, 2009

Broadband Stimulus: Biden Expected to Release Funding Regs. July 1

StimulatingBroadband.com 06/30/09 Vice President Joe Biden will be the featured speaker at an event tomorrow, July 1, in the City of Erie, Pennsylvania focusing on the Obama Administration's commitment to the $7.2 billion "broadband stimulus" provisions of the Recovery Act.

StimulatingBroadband.com believes the Vice President will use the public event to announce the release of the federal agency regulations that will launch the first grant and loan round for the broadband stimulus program.

In federal parlance, the regulations will be released in a Notice of Funds Availability (NOFA).

StimulatingBroadband.com has not been able to confirm or deny, with any relevant agency or White House spokesperson, speculation of today within the telecom industry that the Vice President will announce the NOFA release. Joining the Vice President will be Secretary of Commerce Gary Locke, Secretary of Agriculture Tom Vilsack, Federal Communications Commission (FCC) Chairman Julius Genachowski, and Congresswoman Kathy Dahlkemper (D-PA).

Secretaries Locke and Vilsack head the federal departments which are mandated by Congress to disperse the $7.2 billion in broadband stimulus monies prior to October 1, 2010. Mr. Mark Tolbert, Spokesman for the National Telecommunications and Information Administration (NTIA), the division of the Commerce Department managing the $4.7 billion in broadband funds appropriated to Commerce stated in an e-mail to us of this afternoon that he "unfortunately could not confirm" that the NOFA release would occur tomorrow.

Spokesman Tolbert did tell us however to "keep an eye on our Website tommorrow."

The Office of Pennsylvania Governor Edward G. Rendell (D-PA) stated to us this afternoon that the Governor would be attending to the "...ongoing state budget crisis" while working from his office at the State Capitol in Harrisburg tomorrow, and would not be attending the Erie event.

The Office of Congresswoman Dahlkemper (PA-3) confirmed for StimulatingBroadband.com that the Congresswoman would be attending the event in her District with the Vice President. The Spokesman further stated that Rep. Dahlkemper, applauded the efforts of the Administration to bring broadband facilities to unserved areas of rural America. Congressman Dahlkemper's office referred all inquires concerning "the release of the federal regulations" to the Office of the Vice President.

"Broadband access is critical to rural business competitiveness," stated Dahlkemper's Spokesman, Mr. Zac Petkansas.

Anticipation about the release of the NOFA has been high. Launch of the grant and loan funding rounds is anxiously expected by management throughout the American telecom industry, by rural elected and economic development officials, by state broadband program administrators, and by local governmental officials seeking to subsidize broadband efforts.

"I think the rules will set the stage for a greater national broadband strategy," said industry analyst and governmental telecom consultant Craig Settles of Successful.com. "Will we finally get a meaningful broadband policy, or will all this funding simply go over to the incumbents?"

The White House Press Office yesterday, June 29, released a Media Advisory for the event. StimulatingBroadband.com

Zhone's MXK Access Platform Gains USDA-RUS Acceptance

Zhone Technologies, Inc. via StimulatingBroadband.com 06/30/09 Zhone Technologies, Inc. (NASDAQ: ZHNE), a global leader in network access solutions, announced today that its new MXK(™) platform has been accepted by the US Department of Agriculture’s Rural Utilities Service (RUS) for use by RUS program participants.

RUS and the National Telecommunications and Information Agency (NTIA) are responsible for dispersing the $7.2 billion in economic stimulus funding allocated for broadband initiatives under the 2009 American Recovery and Reinvestment Act (ARRA).

RUS provides grants and low cost loans to help network operators secure authorized equipment to bring high-speed broadband services to rural and underserved communities. Zhone products first gained RUS acceptance in 2003, with the recently announced MXK being the newest addition to the program.

Zhone’s MXK represents significant milestones in broadband access networking and is expressly designed to support the new generation of HD media and on-demand video that require enormous amounts of dedicated bandwidth. In addition to providing a 2x bandwidth improvement over the closest competing platform, the MXK leverages Zhone’s well-proven SLMS(™) access operating system, giving network operators sophisticated service intelligence and intuitive management with ten years of feature development right out of the gate. The MXK is also the only platform to feature Smart OMCI(™) (Optical Network Terminal Management Control Interface) for true ONT standards-based interoperability and ease of use.

“Zhone’s MXK is well-suited to NTIA and RUS stimulus projects,” said Ron Westfall, Research Director, Access and Applications for Current Analysis. “The platform is designed to substantially reduce the cost of broadband for operators and thereby improve service availability and speed, right in line with the Obama Administration’s goals for the broadband stimulus programs.”

“We’re impressed with the performance, ease of installation, flexibility and cost effective price per port provided by Zhone,” said Jeff Lee, Plant Manager for Wisconsin based Chequamegon Communications. “The MXK has the horsepower and the backplane to offer the mega capacity and port counts we need to meet the ever-growing bandwidth desires of our customers.”

“We are very proud of what we’ve accomplished with the MXK, and we’re excited by the opportunity that RUS listing provides our customers,” said Steven Glapa, VP of product management and marketing for Zhone. “We believe that the MXK’s benchmark-setting performance can indeed make a significant contribution toward the achievement of America’s broadband objectives.”

For more information about Zhone’s MXK, or to ask about the RUS program please visit http://www.zhone.com/products/MXK/ or call (877) Zhone-20 (946-6320).

About Zhone Technologies — Access for a Converging World
Zhone Technologies, Inc. (NASDAQ: ZHNE) is a global leader in multi-service access solutions, serving more than 700 of the world's most innovative network operators. The company offers the industry's only fully-integrated portfolio of MSAP, FTTx, EFM and Wi-Fi access technologies, improving network agility and reducing the costs of delivering the full spectrum of access services, including residential and business broadband, VoIP, and High-Definition IPTV — over copper, fiber, and wireless. Zhone is headquartered in California, and its MSAP products are all manufactured in the USA, in a facility that is emission, waste-water, and CFC free.

Zhone, the Zhone logo, and all Zhone product names are trademarks of Zhone Technologies, Inc. Other brand and product names are trademarks of their respective holders. StimulatingBroadband.com

Thursday, June 18, 2009

Department of Energy: Launch of First Grant Round for Smart Grids Now Scheduled for Week of June 22

StimulatingBroadband.com 06/18/09 The US Department of Energy (DOE) has confirmed for StimulatingBroadband.com that the agency will launch the first funding round for smart grid grants, using funds from the federal Recovery Act, during the week of June 22.

Congress appropriated $3.990 billion for smart grid grants in the American Recovery and Reinvestment Act of 2009 (ARRA), in 2 categories. Technology demonstration grants will be funded with $3.375 billion, while demonstration projects will receive $615 million. DOE had initially targeted June 17th as the release date for its document, called a Funding Opportunity Announcement (FOA), which will outline grant criteria, dollar caps on grant amounts, and schedules for application submittals and grant issuance.

Mr. Tom Welch, of the DOE press office, read a prepared statement to us yesterday, in the afternoon hours of June 17th, as follows:

"The Department is continuing to finalize the funding opportunity announcements for the smart grid investment program and smart grid demonstrations. We will be releasing them next week."

In April the DOE issued a 24 page "Notice of Intent to Issue a Funding Opportunity Announcement For the Smart grid Investment Grant Program" (NOI),
Document Download, Go To: Broadband Stimulus Online Library. (see: File Navigation, below for folder location)

The agency received public comments on the NOI up through May 6th.

As the NOI states, "The Smart Grid Investment Grant program was originally authorized by Section 1306 of the Energy Independence and Security Act of 2007 (EISA; Public law 110-140) and later modified by the American recovery and reinvestment Act of 2009 (Recovery Act; Public Law 11105)." The Smart grid Investment Grant program will be administered by the Research and Development (R&D) Division of the DOE's Office of Electricity Delivery and Energy Reliability (OE), within DOE.

File Navigation:
Document Download, Go To: Broadband Stimulus Online Library

Following a brief registration, you will be passed to a secure document library. The Application Guide is in File #1, entitled "Featured Documents and Reports". The document is named "DOE Smart Grid NOI of April 2009." StimulatingBroadband.com

Monday, June 15, 2009

Infrastructure Deployment Reform Needed to Achieve Sustainable Broadband Goals & Avoid Waste

StimulatingBroadband.com 06/15/09 Boston by Alan D. Mandl, Esq.* - The availability of funds for broadband expansion under the American Recovery and Reinvestment Act of 2009 creates an opportunity to move toward the national goal of extending broadband capability to geographic areas that remain unserved or underserved. Several states, such as Vermont, California, Massachusetts, North Carolina, New York have adopted programs to promote and fund broadband expansion.

The National Telecommunications and Information Agency (NTIA) and the Rural Utilities Service of the US Department of Agriculture (RUS) have been authorized to fund broadband expansion grants. These agencies are expected to shortly issue grant application guidelines to kick off the grant application process. All grants are expected to be awarded by October 1, 2010.

Before large amounts of grant funds are expended, aggressive federal and state actions are needed in order to better assure that federal and state funds are not wasted as a result of inefficient infrastructure deployment policies of the type that have plagued private sector efforts to build telecommunications networks.

The imperative to expand the reach of broadband facilities creates an opportunity for the federal and state governments to implement forward-looking infrastructure deployment policies that will benefit not only underserved and underserved areas, but also served areas.

This article addresses the need for revised federal and state rules governing access to poles and conduit in order to assure prompt broadband expansion, efficient use of federal grant funds and sustainable broadband services.

Reduce the Cost of Network Deployment

Access to Poles
Before new lines can be constructed and attached to utility poles in an unserved area, a costly process called “make ready” must be performed. The utility poles to which new lines will attach must be inspected to assure that there is room for a new attachment and that all lines, existing and new, are properly separated in accordance with the National Electrical Safety Code (NESC) and utility safety standards. The condition of poles to carry new lines, the height of existing poles and the need for relocations of existing lines all factor into the work that must be done to ready a pole for a new attachment.

Make ready work has been a chronic source of delay and cost for attaching entities.

A party wishing to attach to utility poles must first enter into a pole attachment agreement with the pole owners (often pole are owned jointly by an electric and incumbent telephone company). The cost of make ready work is determined by a survey of a proposed route by pole owners and the attaching party. The cost of the survey generally must be paid upfront by the attaching party. Once a make ready cost estimate is provided by the pole owners to the attaching party, the attaching party must pay for the make ready cost estimate before any work is done, with a true-up performed after actual make ready work has been completed. Once all pole owners have completed make ready work and inspected the work, the pole s involved will be released to the attaching party so it can construct its attachments.

Some pole owners have adopted unit costs for the specific types of work required to perform make ready. In other cases, pole owners have provided a fuzzy cost estimate or sketchy details on the make ready work to be performed. It is not uncommon for a dispute to arise whether an attaching party is being asked to pay for fixing up existing network problems that are not caused by its proposed attachments. Informal efforts to resolve such disputes can delay a project or could cause an applicant to go to the end of the line if it does not meet the deadline for the make ready payment.

Once the estimated cost of make ready work is paid upfront, the pole owners perform that work. Generally, they are obligated only to make reasonable efforts to complete that work within six months of receipt of payment. In order to break the logjams caused by existing make ready practices, the FCC and those states regulating the rates and terms for pole attachments should take the following actions:

- Adopt and enforce strict time lines for make ready work-several states have adopted regulations setting deadlines for make ready work based upon the number of pole attachments requested in a request to attach (e.g., Vermont)

- Adopt regulations to assure that an attaching entity is not forced to pay for costs that are not caused by its proposed attachments, such as curing existing non-compliant conditions or paying based upon excessive cost inputs. Third party verification of proposed make ready charges may help eliminate potential disputes and might be feasible to require in the case of new builds supported by federal or state funds. The application of unit cost charges for make ready work could help eliminate disputes between attachers and pole owners and add greater certainty to make ready charges. However, care still must be taken to assure that unit costs are reasonably developed and applied.

- Pole owners should be required to develop and maintain geographic information system (GIS) information regarding pole locations, and conditions and the number of attachments on their poles, with the cooperation of attaching entities. Some utilities already have employed GIS in this manner and shared information with attaching parties, such as cable operators. Periodic updating of GIS information is needed in order to benefit all stakeholders.

- A single pole attachment rate should apply to all attachments, whether they are used for high speed Internet access, voice services or video services. Some states adhere to this approach, while others as well as the FCC have directed that a higher rate apply to attachments not used solely for cable service (Internet access service would be covered by the cable service rates to the extent provided by a cable operator). A single rate places a lower cost burden upon a party building out a network to reach an unserved area. It also supports the goal of sustainable broadband deployment. Case after case has recognized that while pole attachment rental revenues are a small fraction of a pole owners revenues, they represent a very significant portion of the revenues of the attaching party. This would be especially true in the case of a buildout in an unserved area with low population density.

- A rapid response process should be developed to address any situations that are causing undue deployment delays and to complement the existing complaint process, which is simply too costly and takes too long (up to six months) to be of any immediate usefulness; this is especially critical where federal and state funds are being spent. The rapid response concept has been used in some states to help resolve quickly disputes between incumbent local exchange carriers and competitive local exchange carriers (e.g., Maine).

- Adoption of practices to facilitate high speed Internet deployment should be taken in to account in setting electric rates. Incentives and penalties should be considered among performance measures used to assess utility efficiency.

- Consideration should be given to deploying state and federally funded infrastructure in the power space on utility poles in order to minimize make ready costs and speed deployment of new facilities, consistent with NESC safety standards.**

- Joint construction guidelines should be implemented to cover situations in which multiple parties invest in shared infrastructure. This approach has been used by the Cities of Boston and Cambridge, Massachusetts, and the State of California Department of Transportation for new conduit construction and may be adaptable to enable shared wireless facilities or other joint use facilities that will be privately owned.

Access to Conduit
In the case of conduit, private builders of infrastructure depending upon access to telephone company conduit have faced several obstacles, all of which would impair any broadband expansion initiative that depends upon access to conduit. For example, some telephone companies have maintained archaic conduit maps and records in paper format. The updating of these maps is unreliable. When a private party wants access to conduit, it is forced to play “pin the tail on the donkey” and guess whether spare capacity exists in a desired location. That party must pay the conduit to advise it whether any spare capacity exists. Guess wrong, and the party must guess (and pay) again. This type of problem has stalled and raised the cost of building out fiber networks.

-The FCC and the states must step in and direct that record keeping practices of conduit owners be upgraded and that the guessing game process be improved upon, if not eliminated. Better electronic records can and should be kept and maintained in an updated fashion, to the extent practicable. This type of information also is important to municipalities, as it enables them to direct builders of fiber to available conduit locations and avoid unnecessary excavation of the public ways. Some municipalities, such as Boston and Cambridge, where the demand for conduit is great, have adopted policies that facilitate access to conduit through the identification of spare capacity. More needs to be done by the FCC and the states to implement reforms for conduit access practices of conduit owners.

The above measures are critical to implement where an entity receiving federal or state funds is building out fiber and other infrastructure for the use of service providers. Funding is limited and grant recipients are accountable to the public to expend grant funds in an efficient and economical manner.

Conclusion
Given the short time before the issuance of broadband stimulus application rules, both the FCC and the states should promptly implement infrastructure access measures that will help reduce the costs and delays associated with broadband expansion, assure prudent and effective use of grant funds and promote the goal of sustainable broadband deployment.


* Alan Mandl is a partner with the Boston and Lincoln, Massachusetts firm, Smith & Duggan LLP. He has worked on wireless and landline telecommunications infrastructure deployments on behalf of private and public clients, including permitting of wireless facilities, construction of intra-municipal fiber facilities, joint and individual conduit build outs, pole attachment agreements and pole and conduit rate issues, and the use of publicly owned conduit infrastructures and rights of way. He may be reached at amandl@smithduggan.com.


** Construction of broadband infrastructure in power space on poles in unserved areas could lower costs for both smart grid and broadband expansion programs. Significant make ready work costs and delays could be reduced. Ownership and maintenance terms would need to be worked out in accordance with applicable law and safety considerations. Incentives to electric distribution companies to partner in this manner should be considered.

Friday, June 12, 2009

USDA Releases Broadband Guidelines: Strong Hints at NOFA Terms

An Exclusive Breaking News Report from StimulatingBroadband.com


StimulatingBroadband.com 06/12/09 BostonIn a short 2 page document issued internally to its field offices 3 days ago, on June 9, the Rural Utilities Service of the US Department of Agriculture (RUS) has given several important hints at the structure and substance of the all-important federal broadband funding guidelines expected by July 1.

Critically, in one key area of procedural information, the document contradicts officially stated public information from both RUS and the National Information and Telecommunications Administration (NTIA) previously reported here at StimulatingBroadband.com.

The document, released to this publication late in the day yesterday, June 11, by a federal employee in advance of its posting on the RUS website is available here.

In defining the "Strategy" of the $2.5 billion broadband program to be administered by RUS, the document states, "RUS will offer grants, direct loans and loan / grant combo." This confirms verbal information received by StimulatingBroadband.com from a RUS representative within the past week that the agency is attempting to gain the greatest leverage possible via the combination of grants and loans to the same applicants, where possible.

Policy Points Affirmed
"We are now clearly seeing strong indications of what RUS will be setting down in its first NOFA, due out by the first of July," commented our colleague Liz Zucco, President of rural telecom grant consultancy MarketSYS USA of Canton, Georgia. Ms. Zucco refers to the much anticipated Notice(s) of Funding Availability which will be promulgated by NTIA and RUS, reportedly prior to July 1.

Four brief points appearing on page 2 of the document frame key policy issues, each of which is clearly spelled out in the language of the American Recovery and Reinvestment Act of 2009 (ARRA). This language is often overlooked by observers focused on the NTIA's $4.7 billion funding program within the Act (Title VI), rather than that of RUS, at $ 2.5 billion (Title I).

Using direct phrases form the Act, RUS states that application selection "priority shall be given to: Projects that will deliver end users a choice of more than one service provider; Projects that provide service to the highest proportion of rural residents that do not have access to broadband service; Projects from current and former RUS Title II borrows; Projects that can commence immediately upon approval."

Rural Telecom's Continuing Legacy



We continue to hear of new entrant service providers misreading the ultimate importance of this clear and direct language in the ARRA -- language that favors incumbent RUS telecom loan recipients.

As the Act enunciates in its Title I provisions, Rural Utilities Service, Distance Learning, Telemedicine and Broadband Program, "...priority shall be given for project applications from borrowers or former borrowers under title II of the Rural Electrification Act of 1936 and for project applications that include such borrowers or former borrowers."

The Rural Electrification Act (REA) is the New Deal program celebrated for bringing public power to rural America. Title II of REA
was added by Congress in 1949 to similarly bring voice telephony to rural communities. RUS telecom program procedures, practices, and regulations have been built-up over a 60 year period. As we reported back in March, the rural interest voting bloc in Congress demanded that RUS receive dedicated broadband funding in ARRA, just as it added broadband appropriations to the 2008 Farm Bill. RUS programs for housing, water, wastewater, and telecom remain a fundamental part of rural America today -- economic developmental programs familiar to every state and municipal official representing our less densely populated regions.

It is simply not possible that the Obama Administration could eviscerate 60 years of accumulated federal regulations for rural telecom, even if it desired to. Much of those regulations were crafted to protect the rural telephone cooperatives, and thinly capitalized investor owned rural carriers, from competition. The corpus of those regulations will now enable new federal broadband funds to flow to these same rural providers, many of which are "borrowers or former borrowers" of REA telecom funds.

Back to a Joint / Unified Set of Rules
The only surprise we see in the document of June 9th is this statement: "By early summer 2009, RUS and NTIA will publish a joint Notice of Funding Availability (NOFA) in the Federal Register seeking applications for assistance." The concept of a joint NOFA, of one document issued by both NTIA and RUS to launch the first funding round for broadband stimulus monies, has been previously denied by authorized and separate statements made to StimulatingBroadband.com by public affairs personnel of both agencies.

In a story dated May 8, we quoted NTIA Spokesperson Mark Tolbert saying, "There will be separate NOFAs. To my knowledge, NTIA and RUS will each issue their own NOFA." In our story of May 19th, following over a week of working with various USDA personnel to confirm the concept of 'separate but simultaneously issued' NOFAs, USDA Rural Development Spokesman Jay Fletcher stated that each agency would issue a separate NOFA.

Who Cares?
Who cares, other than K Street lawyer-lobbyists and mavens of the most mind numbing of federal regulatory details, whether the agencies issue either joint or separate Notices rounds?

Prospective grant and loan applicants need to care, as they plan their strategies, and set their schedules for competitive application filings. Theoretically, separately issued NOFAs could mean that the pledge, made by both agencies, to inform applicants simultaneously of grant and loan guidelines could slip over time, particularly in the successive 2 funding rounds. Thus, applicants could be required to frame application strategies while waiting for one agency's information to be issued.

Conversely, a jointly issued single NOFA covering both agencies means that rural service providers will be less able to look at RUS programs and regulations as strategic pure plays. Under this scenario, coordination between rural operators seeking RUS funds, and regional non-rural providers and coalitions will become much more of a competitive necessity for both.

StimulatingBroadband.com has inquires into NTIA and RUS asking for clarification regarding the joint vs. separate NOFA issuance question.

Lastly, the document states "A series of workshops will be held jointly with NTIA across the United States in July 2009. These workshops will explain the program to prospective applicants including the program requirements and how to apply."

Our Take:
We believe the Obama Administration continues to work mightily to see that both NTIA and RUS issue their NOFAs simultaneously, in order to give maximum information, and decision making flexibility, to applicants.

It could very well be that the Administration -- and it is a group of policy makers in the Executive Office of the President making the strategic policy decisions -- has recently decided that the interests of programmatic coordination require a joint NOFA. We read other auguries that suggest why that may be so.

For now, we remain convinced of one of the central verities of the entire broadband stimulus undertaking: Federal programs for rural telecom subsidies, first erected as America moved from FDR's New Deal to Harry Truman's Fair Deal, will not be dismantled by a Democratic Congress or President.

Service providers that see opportunities in the emerging broadband future for rural America are well advised to become very knowledgeable very quickly about the programmatic and regulatory accomplishments that have come to define rural telecom since that era.



USDA-RUS ARRA Broadband Investment Program Released 06-09-09                                                                                           



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